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What is your understand our democratic process functions? It could be something like this. The public votes for MPs. They legislate on bills. Should a majority is achieved, the bills are enacted as law. Legislation is maintained by the courts. End of story. Well, that’s how it operated in the past. No longer.

The Rise of Secret Tribunals

Nowadays, overseas companies, and the oligarchs behind them, have the power to sue elected administrations for the regulations they pass, at offshore tribunals made up of corporate lawyers. The cases are conducted behind closed doors. In contrast to domestic courts, these bodies provide no opportunity to appeal or judicial review. Ordinary citizens are barred from bringing a case to them, just as our government, or even businesses based in this country. Access is granted solely for businesses registered abroad.

Should an arbitration panel rules that a law or policy might diminish the corporation’s projected profits, it can award compensation of hundreds of millions, even billions.

This compensation are based not on tangible damages but funds the tribunal officials conclude the company could potentially have made. The state might be compelled to abandon its policy. It will be hesitant to enacting future policies in that area, for fear of being sued.

A System Growing Exponentially

Unprecedented levels of legal actions are being brought, as firms learn from each other, and hedge funds fund legal actions for a share of a cut of the takings. The result? National sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede a country's own laws and the rulings taken by parliaments is that this stipulation has been incorporated – without public consent, and frequently under an atmosphere of total confidentiality – within bilateral investment treaties.

A Specific Case: The UK Coalmine

Twelve months ago, a conservation group secured a significant win at the high court. The justice determined that schemes to excavate the first deep coalmine in the UK for three decades, in Cumbria, had been illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine could have zero effect on climate commitments. The Labour government subsequently revoked the permission the previous administration had approved. Currently, this legal outcome could be compromised by an secret arbitration panel accountable to no one but the corporations petitioning it.

Last August, a company whose ultimate owners are based in the offshore financial centre filed a lawsuit versus the UK government. Recently a dispute settlement body in the United States was established to adjudicate on it.

The claimant is suing the UK for the profits it could have earned if the mine had received permission to commence operations. The public has no clear indication how much this could amount to. Which individual is serving as its counsel challenging the British government? A member of parliament, and previous senior legal advisor in the outgoing administration, that great patriot Sir Geoffrey Cox. The state passes a law, the high court validates it, then a foreign company challenges it through an undemocratic private court, and a sitting MP works for its behalf.

An Oligarch's Case

On the same day that the tribunal on the mining lawsuit was convened, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows little of the case so far, but it is highly possible that he’ll use the arbitration process to contest the restrictions the UK imposed on him following the invasion of Ukraine. He has already filed a claim against a small nation with similar intent, claiming $16bn: equivalent to half of government’s annual revenue. Among the counsel on his side? a prominent lawyer, spouse of the previous PM.

International law scholars argue that the EU’s delay in leveraging immobilised Russian assets as guarantee for its loan to Ukraine is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, undemocratic power over sovereign states may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Mounting Threats

The public was told that such things could not occur. Previously, a former prime minister, advocating for the largest and riskiest of all investment pacts, declared: “Britain has agreed to trade deal after trade deal and there has never been a issue in the past.” An expert on this issue described activists of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression appeared to be that only poorer nations should be concerned by these lawsuits. Cautionary notes that “when companies grasp the power they now possess, they will shift their focus from the vulnerable countries to the wealthy nations” were met with general mockery.

That warning has come to pass. Recently, energy and mining firms have filed a record number of cases against nations across the economic spectrum, contesting – similar to the Whitehaven project – government attempts to prevent global warming. Corporations have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained $84bn. That is equivalent to the combined GDP